The Policy Roadmap


In a piece posted on the Washington Post website this afternoon entitled Bailout vote that was deadly in 2010 to live on in 2012 , we learn that the vote on the Targeted Asset Relief Program (TARP) proved an almost-certain election loser for House and Senate candidates in the 2010 elections.  Although not a complete surprise, as most 2010 election observers saw this coming, it is nonetheless a tragedy.

More than any other vote in recent memory, the vote on TARP clearly defined those who were deserving of election to the House and Senate, and those who were not.  Had the irresponsible naysayers prevailed, the banking system would almost assuredly have crashed with devastating consequences for the country.  Today’s economy looks robust compared to what it would have looked like but for the successful TARP vote.

That the American electorate on one hand apparently believes that government needs to focus more attention on the economy and on the other hand believes that the TARP vote was an unnecessary corporate give-away, shows the gigantic problem we have in America with informed decision-making.  Our problem today is that apparently too few voters get their information or “news” from balanced sources, such as mainstream newspapers.  Today, the sources are all too often the over-opinionated pontificators on networks such as Fox or MSNBC.  It is impossible to make sound public policy without accurate information and we are today seeing the terrifying consequences of uninformed decision-making.  Good luck America, as it appears only luck will be able to save us from the consequences of our ignorance.

To say I was disappointed in President Obama last week is an understatement.  I had hoped that his promise of change meant a more sincere effort to develop public policy rationally and less ideologically.  I’d had enough of ideological driven policy under President Bush.  I hoped for more under President Obama.  I was wrong, because although our President and government changed, our system dominated by two parties, which engage in mortal combat for power, did not change.  That means that party ideology matters more than rational solutions to America’s problems.  Also not changing was the system’s toleration for policy driven by interest groups within the parties.  The two are highly related, unfortunately.  With appeasement of interest groups comes acceptance of their prescription for changes in public policy, notwithstanding what might be rational or best for the country. 

Vice-President Cheney got no end of criticism for formulating over a number of months a national energy strategy without consulting with environmental groups.  Now, last week we have President Obama announcing a national energy strategy within 5 weeks of his taking office.  There was no pretense of process for forming a new national energy strategy, he and his team just did it.  I can also assure you that as many industry advocates had a share in development of Obama’s plan as there were environmentalists developing Cheney’s.  There have been no screams of outcry this time though.  I guess it’s because environmentalists wear white hats and “big oil” black hats and the former is inherently about protecting the public interest and the other is all about exploiting it for profit.

This is the “change” that Obama has brought to Washington–not change in the way policy is developed but a change in the insiders who are consulted and the corresponding results.  The country is now unconcerned with domestic oil and natural gas development, as was a focus of Bush-Cheney policy, it is now concerned with promoting renewable fuels.  It’s not the change we needed.

I feel very confident in saying that the energy plan announced last week by President Obama won’t work.  Of course, alteration may yet take place that would alleviate some of my concerns, but for now the energy course the President appears to have set is one that’s deeply flawed.  It’s pushing string.  It’s picking winners and losers.  It’s developing a course of action based on an incomplete understanding of the problem.  The result is a plan of action that fulfills special interest fantasies but is almost totally disconnected with reality.  

My prediction is that if Obama pursues the energy policy he announced by virtue of his budget and address to the nation last week domestic oil and natural gas development will wither.  Yes, we will develop more renewable sources of energy, perhaps even matching the President’s goal of doubling the amount of supply from such sources.  Yes, too, we might put more efficient automobiles on the highway and use less gasoline.  But, these steps will not significantly reverse the country’s dependence upon foreign oil which causes so many American dollars, and thus American jobs, to flow overseas.  His policy, in fact, exacerbates the problem by withdrawing all tax incentives for domestic production and, indeed, raising the tax burden.  Actions by Secretary of the Interior Salazar to reduce access to public lands for oil and natural gas development also make things worse.  This means we’ll be producing even less than the inadequate amount produced domestically during the Bush administration.  This can only mean increased importation of oil since the other steps we’re taking are completely inadequate to themselves stem that tide.  The fact is that for the Bush policy of increasing to domestic production to have worked to its potential, the country needed to have opened the Arctic National Wildlife Refuge and restricted offshore lands to development.   The Democrats (and a few Northeast Republicans) saw to it that that didn’t happen. 

What the country needs is a “doing it all” approach to energy policy.  It needs to raise gasoline taxes in a revenue neutral way to send a powerful message that oil is not cheap.  Then it needs to encourage domestic production and the incentivization of renewable energy.  It’s yes to it all.  A significant problem is the course of action I’m advocating is that it would be unpopular with environmental groups and President Obama has accepted their worldview by default.  Without ever having been presented the complete picture, our President has apparently made his decisions. 

I had hoped that General Jones would have been at the table in this debate, given his familiarity with the national security consequences of imported oil.  It seems, however, that he wasn’t.  He’s apparently still settling into the job and visiting foreign lands.  He may be as shocked as anyone by the abrupt early announcement of so significant a policy.  My hope for the country is that this debate is not yet over and that maybe General Jones may yet be able to have some influence. 

As I indicated last week, if President Obama’s proposals for health care and education reform are as well thought out as his energy policy, the country is in trouble.  Maybe Obama knows more about the other two, but he clearly knows little about energy.  And the failure here will be not just America’s ability to become a little less dependent upon foreign oil, it could be a political time bomb giving the Republicans a volatile issue just in time for the next elections (2010 and 2012).  If natural gas and oil prices rise as they most certainly will as the world economy revives, the rise in price will be as stunning and as economically shattering as were the price rises of last year.  A public that is just, hopefully, getting its feet back on the ground economically will not be pleased with high energy prices taking money out their wallet.  It will also not be pleased by Obama’s insufficient efforts to increase domestic supply.  It is entirely plausible that a Republican Party that has not yet learned its lessons will be back in power in the House or the Senate or even the White House before the Party is ready.

Let me close with one final observation on the “change” that Obama has apparently brought to Washington.  I hoped for change where the President could sit down and work out differences with opposing interests and, in dialectic fashion, advance a rational agenda.  Instead, you have the American President taunting industry lobbyists in the last few days to bring on the “fight”.  Mr. President, this shouldn’t be about fighting and competition for supremacy, it should be about crafting a policy that works for America.  Our first indication that we’re on the right road will be when both industry AND the environmental groups are equally unhappy.  Clearly that’s not the case and what you’re saying to me is that you’ve made your decision, that you know all that you need to know, and that you’re not willing to listen, all a mere five weeks out of the gate.  Disappointing indeed.

First the speech, now the budget.  We’re beginning to see that Obama is no centrist after all.  His agenda is distinctly to the left of left of center and he’s not an incrementalist.  He’s setting about to change America radically and fast.

America needs change.  The problem is that our choice for political leadership in this country is between a hyperactive Democratic Party with a leftist agenda and tired and worn out Republican Party with a right wing, moralistic, and arguable overly-free market agenda.  The fact remains that there exists a huge amount of real estate between the two extremes, real estate upon which I would argue America would be better building its future home the than real estate being proposed by the two American parties.  And today, one party is in control and it is on their real estate that the we’re proposing to build.

What concerns me the most about Obama’s proposals is the relative lack of thought and preparation that is behind them.  He has produced all of this in just one month!  Echoing what David Brooks observes in his column in the New York Times today (The Uncertain Trumpet) Obama is merely laying out a conceptual framework for the future but he is leaving it to others to work out the details.  That’s dangerous when the others are Congressional leadership dominated by Nancy Pelosi Democrats.  I am concerned that facts (rationality) will play too small a role and leftist ideology to large a role as laws are passed and programs are initiated to build on the Obama conceptual framework.  Likening policy to a road map, it needs to be based upon reality in order to deliver us to the desired destination.  If based on fantasy, it is unlikely to lead us to where we want to go.  Reality and rationality must trump shallow and overly-idealistic ideology.  

I will keep returning to energy as an example as, substantively, I know it best.  On energy, the budget is very “command and control” and sets about picking winners and losers.  One loser appears to be all things “oil and gas”.  A first glimpse at Obama’s energy budget reveals that he proposes elimination of almost every incentive for domestic oil and natural gas production on the books.  It also appears to eliminate all oil and natural gas research and development.  This is not wise when the American economy is dependent upon foreign oil to fuel an economy that will not even under the most optimistic scenarios be able to wean itself from oil for transportation for decades.  Complex issues require complex solutions.  It doesn’t appear we’re going to get them from Obama.  He’s too busy painting colorful conceptual murals of the America he envisions and leaving it to others to try to turn that fantasy into reality.

In Obama’s defense, I suspect most of the “oil and gas” policy outlined in the budget proposal yesterday was the less the process of an Obama policy process than it was the creation of green eye shade types at the Office of Management and Budget (OMB) who’ve fought oil and natural gas for years.  Apparently President Reagan’s first budget did almost the same thing.  

For today, at least, that is going to be the extent of my criticism of President Obama.  As I’ve indicated, I believe the country needs change.  Of that I have no doubt.  But this much change so fast concerns me enormously.  It risks losing rationality in the process and without that in the mix, we will have nothing to show except enormously expanded American debt.  Let me now recommend some of the better and/or most informative pieces that I encountered this morning in my journey through today’s Washington Post and New York Times. 

I think the best sources of basic information this morning on the President’s budget proposal are the “analysis” pieces that can be found in both the Post and the Times.  The Post’s piece by Dan Balz is entitled Ambitious Blueprint a Big Risk The President is Willing to Take.  The Times’ “news analysis” piece is by John Harwood and is entitled Political Skills Put to the Test.  On the opinion front, representing left, right and center, I recommend three: Climate of Change by Paul Krugman; The Obamaist Manifesto by Charles Krauthammer; and the David Brooks column referenced and linked above.

As I indicated above, I am going to withhold criticism and give Obama a chance.  There will be plenty of time to oppose, if that is what is ultimately called for, as the conceptual frameworks become blueprints become law.  

While I applaud and support President Obama’s efforts to extend an olive branch to Republicans, as long as he leads a party that is as beholden to liberal interest groups as Republicans are to conservative interest groups, there is going to be very little chance of finding “bipartisan” common ground.  Add to this the fundamental interest of both political parties in winning the next election and you can see that there would rarely much interest upon the part of either party in finding common ground.  This is even more true for the out-of-power party, in this case Republicans, as there is little for them to gain in going along along with majority party initiatives.  Expect to see bipartisanship only in crises, natural disasters, national security, etc..  One might have hoped that economic crisis (the largest since the Great Depression) qualified as a reason to come together in bipartisan fashion, but the stimulus bill showed us this wasn’t the case.  For more on this, see my posting entitled Russian Roulette.   

Of interest on this topic today are two pieces, a story in the Washington Post entitled After Stimulus Battle, Liberals Press Obama and an Op-ed in the New York Times by James Morone entitled One Side to Every Story.  The first explains that liberals are now encouraging the President to step forward boldly with a liberal agenda and to avoid unnecessary compromise.  It is a very good piece that I recommend reading highly.  The second opinion piece informs us that partisanship has always been and will always be.  It is in part what makes our system work.  It provides a good perspective.

I will make two general comments and then address, briefly for now, both comments:  1.  America is becoming more polarized; and 2. For a variety of reasons, including the increasing partisanship, America is doing a very poor job making rational public policy decisions in the national interest. 

There can be little doubt that Congress has become more polarized.  This is due to a variety of factors but is probably mostly due to gerrymandering by state legislatures.  Congressmen and Congresswomen are sent to Washington by their ideologically left or right leaning districts to pursue that ideological agenda.  That’s makes it very difficult for either party to come together in the center.  That’s not what they’ve been sent by their constituents to do.  I regard this as tragic as it leaves most of the country–those who reside in the middle of the American political spectrum (which I’ve described before, courtesy of Charlie Cook, as between the 35-yards lines)–under-represented and unable to meaningfully advocate for “centrist” solutions.  In addition, party leadership tends to represent the ideological extremes as do the parties’ major interest groups.  

Along with party identification and left or right ideological orientation comes, I would argue, a tendency to begin to place party doctrine or ideological assumptions ahead of careful discernment of the facts of a particular case.  Thus, instead of doing a careful examination of the facts of a particular issue, we apply informational proxies that we have obtained from our party and/or the left or right wing ideological special interest groups that we trust.  We, thus, often by-pass rationality in favor of popular wisdom or group think.  The huge downside is that decisions made irrationally are unlikely to work. 

I am, therefore, not optimistic that the present system, growing more polarized by the year, will be able to fashion policy that will be either be effective or broadly acceptable to the majority of Americans.  Obama’s instincts are correct that the system needs to change.  Post partisanship is a lofty goal, but its not going to happen in our present two party system and he’s not going to lead us there with feet firmly planted in the one of the two dominant political parties.  For post partisanship to really work I would argue that Barack Obama would have to, at least functionally, “leave” the Democratic party and become a true post partisan.  This is unlikely to happen.  Until it does, post partisan talk will be just that.